No, actually I assume that there is currently trade and it is likely to continue until it's no longer viable. You do agree that there is currently trade in these commodities, don't you?

No, I don't assume that the governments won't let some of their population starve. I'm not willing to assume that they'll allow general starvation in Saudi Arabia however. The Saudi regime's grip on power is already questionable. If they let too many people starve Bin Laden will be put in charge.

I absolutely agree that these can't be expected in times of extreme stress. That's why I wrote "If (or when) we get to the point that that trade is no longer possible, we'll no longer be able to worry about economic models anyway." That would indeed be a time of extreme stress!

You assume that governments would not willingly let some sectors of their own populations starve

Yes, and I think China would almost welcome a 200-500 million drop in population size.

Mother Nature Bats Last

Yes, I absolutely agree with this. I'm not arguing that the end result of ELM will be any less painful, just that there is something of an upper bound that isn't being accounted for. It may even have the same end result, since a situation where the Saudi's are forced to cut their consumption or give up food imports may result in such social unrest that they end up with neither. I think it's more likely that the Saudi's will make the same changes that Iran did, and start raising prices slowly before it becomes a problem. The Saudi princes may not be democratic, but they are smart.

need every acre for food production

Which is why animal labor is a long term poor plan, because one can put power sources like PV or windmills so they do not effect the crop growing locations.

A VERY good observation, that we tend to forget.
mechanisation freed up a lot of foodstuff resources!!

Put a sail on your plow instead of a horse..

A couple of things that don't immeadiately come to mind is that horse manure is great stuff. Apparently virtually 100% of the nitrogen phosphorous and potassium are returned. In housing of older times the livestock lived below the living quarters and so provided heat for the house in winter.
What the bio-fuel should do is to run the motor to drive the thrashing machine. It can also be used to drive the motor that runs the baler (balers however are high maintenance) that the horses will pull.

I think we will need all of the tools that we can get. Horses can eat off of land that can't be cultivated. So as Wendell Berry pointed out they are well suited to a small mixed farm on a different class of land. We need to get rid of the one size fits all paradigm.

A British organic farmer in the 40's named Freind Sykes (Wrote: Humus and the Farmer) noted that aside from an increased stocking rate conferred by having a diversity of livestock on the farm (You can keep more animals of a diverse nature on the farm then just one kind). That the livestock had a pulsing effect on the land (he had his own pasture model that let animals on to pasture in a various order). This pulsing created healthy soil. Mr Sykes boasted that he could bring cows that were infected with foot and mouth disease onto his farm and not only would his cows not contract the disease but the infected would get better.
Ecotones or 'edges' are vectors where the more intersections of woods, water, and field come together offer greater wild-life habitat and diversity.
Song birds increase the frequency of the environment and crops respond favorably (like fertilizer) to say nothing of helping to keep insect predation under control.

In a Small Farmers Journal years ago there was an article about a Korean rice harvesting machine that looked a bit like the brush off of street sweeper that a man had altered to create a horsedrawn grain harvester. The idea seemed very intelligent and when thinking about our current knowledge base I would suspect that new types of horse drawn equipment could greatly improve the effectiveness of horses.
Lightening the draft, increases mileage. Since the moldboard plow when over-used can inflict such damage no-till horse drawn machinery could prove to be quite advantageous. Other thoughts along this line are that realizing that monoculture is a large part of the problem so explore polycultural practices. And that if you can increase soil quality you get big yield increases. So initially if we are forced into a crisis return to subsistence farm models then yields would be substantially below where they would be in 10 years with proper soil management and weather blessings. Of course if we don't hit a wall then expect to have lost your time and capital investment since you can only take a beating in this marketplace.